Duke Energy files for 15% rate hike

Scott Disavino

Rueters.com

July 1, 2011

NEW YORK, July 1 (Reuters) – Duke Energy (DUK.N) said Friday it filed with North Carolina utility regulators to boost power rates by about 15 percent, or $646 million, driven primarily by capital investments made over the past two years.

“Since 2009, we've spent $4.8 billion to modernize the system and comply with environmental regulations,” Brett Carter, president, Duke Energy North Carolina, said in a release.

Duke, of Charlotte, North Carolina, said a typical residential customer using 1,000 kilowatt-hours of power a month would pay about $97.05 in the autumn. If regulators approve of the rate increase, Duke said the monthly bill would increase by about $19.

If approved, Duke said the new rates would likely go into effect February 2012.

The company said it has already spent most of the capital investments to retire and replace aging power plants and equipment and comply with expanding state and federal environmental regulations.

Specifically, the company said it installed a new sulfur dioxide scrubber on the 562-megawatt Unit 5 at the Cliffside coal-fired power plant in North Carolina to meet federal emission standards.

Duke also said it built a new natural gas-fired power plant at the Buck facility in Rowan County, North Carolina, and installed a new hydroelectric powerhouse at the Bridgewater facility in Burke County, North Carolina.

NEW COAL PLANT FINANCING

The rate increase would also cover some financing costs for the new 825-MW coal-fired Unit 6 at Cliffside, which is under construction and expected to enter service in 2012, Duke said.

“The electric system that serves our customers is aging. That, combined with increasingly stringent state and federal environmental regulations, is driving the company's plan to retire 18 units at five coal-fired power plants and 20 units at four natural gas-fired power plants by 2015,” Carter said.

In addition, Duke said the increase was also driven by lower than expected electric sales due to the recession, changes in financing and other general costs.

The company's request proposes an allowed return on common equity (ROE) of 11.5 percent (current allowed ROE in North Carolina is 10.7 percent) with a 53 percent common equity component.

Duke Energy owns about 19,000 megawatts in the Carolinas and serves about 2.4 million customers in North and South Carolina